Madras HC Rules Tobacco Cured with Jaggery Water as Raw Leaf under GST, Overturns AAAR Chewing Tobacco Classification [Read Order]
The Madurai Bench held that tobacco cured with jaggery water and sold in pouches qualifies as raw tobacco under CETH 2401 20 90, overturning prior rulings that treated it as manufactured chewing tobacco.
![Madras HC Rules Tobacco Cured with Jaggery Water as Raw Leaf under GST, Overturns AAAR Chewing Tobacco Classification [Read Order]](https://images.taxscan.in/h-upload/2026/04/23/2134269-aaar-goods-and-services-tax-.webp "Madras HC Rules Tobacco Cured with Jaggery Water as Raw Leaf under GST, Overturns AAAR Chewing Tobacco Classification [Read Order]")
In a recent ruling, the Madurai Bench of the Madras High Court has held that tobacco processed with jaggery water and sold in pouches qualifies as raw tobacco under the Goods and Services Tax (GST) regime, not as manufactured chewing tobacco. The appellant Arumugam’s process involved purchasing dried tobacco leaves, removing stems and dust, curing them with jaggery water to prevent...
In a recent ruling, the Madurai Bench of the Madras High Court has held that tobacco processed with jaggery water and sold in pouches qualifies as raw tobacco under the Goods and Services Tax (GST) regime, not as manufactured chewing tobacco.
The appellant Arumugam’s process involved purchasing dried tobacco leaves, removing stems and dust, curing them with jaggery water to prevent decay, cutting them into small pieces, and packing them for sale under the brand Kulavi’s Kavi Cut Tobacco. He argued that this limited processing did not amount to manufacturing and that his product should fall under CETH 2401 20 90 (raw tobacco).
The Advance Ruling Authority and the Appellate Authority for Advance Ruling had earlier held the product to be “manufactured chewing tobacco.” A single‑judge bench of the High Court upheld those findings in October 2024.
The respondent argued that once an assessee seeks and obtains an advance ruling, they are bound by it, and the scope for judicial review is highly limited.
After considering the matter, the Division Bench observed that similar tobacco products had already been recognized as raw tobacco in an earlier case (WA(MD) No.746 of 2021), provided the process remained confined to what was approved in Pachiappa Chettiar v. State of Madras (1963).
The bench of Justice G.R. Swaminathan and Justice K. Rajasekar noted that allowing inconsistent classifications would lead to “an egregious breach of the equality principle,” as identical products would attract different tax rates.
The Court clarified that while advance rulings are binding on applicants, they remain subject to judicial review under Articles 226 and 227 of the Constitution, and stated that High Courts can intervene when authorities act beyond jurisdiction or violate natural justice.
Accordingly, the Bench set aside the orders of the Advance Ruling Authority, the Appellate Authority, and the Single Judge, declaring that Arumugam’s product should be treated as raw tobacco under CETH 2401 20 90. The appeal was allowed with no order as to costs.
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